Metrics that are covered : Return on Investment (ROI) , Return on Assets (ROA) ,Cash Conversion Cycle (CCC) ,Working Capital Ratio ,Operating Expense Ratio (OER)
6. Return on Investment (ROI) = A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments.That is, if an investment does not have a positive ROI, or if there are other opportunities with a higher ROI, then the investment should be not be undertaken. Return on investment (%) = (Net profit / Investment) × 100
7. Return on Assets (ROA) = An indicator of how profitable a company is relative to its total assets.It gives an idea as to how efficient management is at using its assets to generate revenue. Return on assets = Net Income / Total Assets
8. Cash Conversion Cycle (CCC) = Also called Cash Cycle is a metric that expresses the length of time, in days, that it takes for a company to convert resource inputs into cash flows. The cash conversion cycle attempts to measure the amount of time each net input dollar is tied up in the production and sales process before it is converted into cash through sales to customers.CCC = DIO represents days inventory outstanding (in Days) + DSO represents days sales outstanding (in Days) + DPO represents days payable outstanding (in Days)
9. Working Capital Ratio = A measure of both a company's efficiency and its short-term financial health. The working capital ratio (Current Assets/Current Liabilities) indicates whether a company has enough short term assets to cover its short term debt. Anything below 1 indicates negative W/C (working capital). While anything over 2 means that the company is not investing excess assets. Most believe that a ratio between 1.2 and 2.0 is sufficient.
10. Operating Expense Ratio (OER) = A ratio that shows the efficiency of a company's management by comparing operating expense to net sales. A measure of what it costs to operate a piece of property compared to the income that the property brings in. Operating Expense Ratio (OER) = Operating Expense / Net Sales